Incentive Plans

Companies presidents, CEOs, and managers for decades have utilise incentives to attract, reward, and retain employees. Dessler (2011) recognizes that most employees receive requital or hourly wage as well as other incentives (Dessler, 2011). Dessler (2011) reports a variety of incentive plans ranging from piecework plans to the earning at risk yield plans (Dessler, 2011). While in that respect atomic number 18 many incentive plans that can be discussed, this paper will only highlight the advantages and disadvantages of merit constitute as an incentive and do good sharing plans.Merit PayDessler (2011) defines merit pass as a salary increase awarded based on carrying into action and becomes part of the employees base commit salary (Dessler, 2011). Dessler (2011) asserts that merit make up has advocates who argues that rewards tied to performance can motivate performance and detractors claim that merit pay undermine teamwork and misconception of pay as a whole (Dessler, 2011) . As Dessler (2011) defines merit pay with advocates and detractors other authors such(prenominal) as Longenecker and Goff (1992) uses the landmark performance appraisal instead of merit pay.Longenecker and Goff (1992) states that merit pay or performance appraisal is believed to be effective by managers and subordinates because it help clarify employee input approximately his or her job (Longenecker and Goff, 1992). At the aforesaid(prenominal) time, both managers and subordinates viewed merit plans as ineffective for linking pay to performance, ineffective for improving motivation and performance as well as ineffective for managers and subordinates working relationship (Longenecker and Goff, 1992).While Longenecker and Goff (1992) referred to merit pay more as performance appraisal others such as Hayes (1999) questions incentive programs altogether. In the hold Pros & Cons of Pay for Performance the author claims that no one really knows if incentive programs truly work ( con vert, 1999). This article further asserts that incentive programs such as this plan create competitiveness that is not necessarily best for a company (Hays, 1999). This article proposes that rewards control behavior through seduction, that it ruins relationships, create competitiveness, that it reduces risk taking, creativity, andinnovation (Hays, 1999).Profit Sharing Plans Profit sharing plans argon incentive plans where employees receive a sell of a companys annual profits (Dessler, 2011). Dessler (2011) asserts that there is ample evidence that profit sharing plans boost productivity, but the effects on profits is unimportant once one factor in costs (Dessler, 2011). In fact, the article Profit-Sharing Plans Work the author proposes that specie profits are the best way to let employees know that they are important to the company and profit sharing is a tool that could turn the country around (Profit-Sharing Plans Work, 1988).Further, the article emphasizes how workers worry le ss about management receiving massive profits at the expense of the employees earnings and for management it provides a financial break that limits losses in economic downturns (Profit-Sharing Plans Work, 1988). All the while, this article argues that profit sharing plans where proceeds go into retirement funds instead of employees pockets fail to motivate and improve performance (Profit-Sharing Plans Work, 1988).In any case, this article suggests that company team spirit can be damaged when upper management or salaried employees are the only participants in the profit sharing plans of the company (Profit-Sharing Plans Work, 1988). Yet, Flesher (1993) article describes the profit sharing plans as the type of contribution plans that enables employees to share in accumulated profits of the company, and it is divided among the participants on a pro rata basis based on the participants and the total income of all participants in the plans (Flesher, 1993).Such plans offer the advantag es of immediate task deductions for corporation and no immediate tax payable by the employee (Flesher, 1993). Nevertheless, Hays (1999) questions the use of incentive programs for improving performance and asks the question why do so many companies claim that incentive programs administered effectively or improve company performance? Hays (1999) reports in his article that personal recognition can be more motivational than money, clearly the multiplication have changed because it is this authors opinion that people are first motivated by monetary reward, then material reward, and then personal recognition.Conclusion Dessler (2011) describes individual incentive programs as performance based pay and team based incentives as performance pay for the team, as variable pay pays a conclave for its productivity (Dessler, 2011). Dessler (2011) continued by describing the various types of incentive pay plans ranging from the piecework plan to the earning at risk pay plans (Dessler, 2011). After analyzing some of the authors article and this author concluded that incentives are not just for the employees but for the employers as well.Pay incentives such as the merit pay plans and the profit sharing plans can be used as tools in an effective manner to increase productivity for a company, but as for motivational purposed for the employees, this could be in some ways for some employees a positive thing and for other employees a ban thing.Also, when asked the question do profit sharing plans improve performance?), people identical Hays (1999) take care to think that personal recognition can be more motivational than money. While people like Flesher (1993) seem to think that merit pay and profit sharing offers advantages of immediate tax deductions for corporation and no immediate tax payable by the employee (Flesher, 1993). Last, incentive pay has been and will always continue to be used in corporate America as a tool to attract, reward, and retain employees.